LIBOR and Reference Rate Reforms
LIBOR ends in 2021, but you should act now.
Publication of the London Interbank Offered Rate (LIBOR) will cease after 2021. The shift away from the most widely used interest rate benchmarks is an immense change to global finance that will have far-reaching impacts.
Alternative reference rates (ARRs) are being developed in the key markets to replace current LIBOR currency rates; US dollar, Euro, British pound, Japanese yen, and Swiss franc. In the US, the Alternative Rates Committee selected the Secured Overnight Financing Rate (SOFR) as the preferred alternative reference rate to US dollar LIBOR.
ARRs are structured differently than LIBOR rates, which will mean complexity for impacted organisations.
The SEC and other regulators around the globe have warned of potential market disruptions for those that do not proactively transition away from LIBOR.
All companies - regardless of the size of their LIBOR exposure or industry - need to act now.
Your Challenges:
- Will you be able to manage an orderly and timely transition?
- Do you know what solutions are available?
- Are you able to assess business changes that may arise due to the differences between ARRs and LIBOR?
- Are your stakeholders aware of how you are tackling the transition?
How can we help?
Some people view the LIBOR transition as an infrastructure problem. We can help you see it as part of a digital transformation programme that can lead to sustained growth.
- Define your LIBOR transition plan and governance programme
- Monitor and assess ARR and help define appropriate strategies
- Analyze your exposure and adjust your models
- Remediate contracts with the borrowers
- Create an outreach plan for clients, counterparties, vendors, and regulators.
- Foresee and help you implement accounting changes
